Reno's Ormat Technologies faces a class action lawsuit on behalf of shareholders regarding its financial disclosures.
The suit, developed by a number of law firms nationwide, alleges that publicly held Ormat did not issue accurate and true financial statements, which caused investors to overvalue the company's shares.
The company denies the complaints and says it plans a vigorous defense.
"If you bought stock in 2008 or 2009, you were buying stock at an inflated price because the company wasn't doing as well as it statements said it was," says Seth Ottensoser, partner with Bernstein Liebhard in New York. "The financial statements weren't telling the truth about the company."
The suit alleges that on Feb. 24, Ormat disclosed that it would restate its 2008 financial statements and said the 2008 statements could not be relied upon. The company also announced restatement of its financial statements for the three- and nine-month periods ended Sept. 30, 2009.
The suit is filed on behalf of investors who bought the shares between May 6, 2008, and Feb. 24, 2010.
When Ormat announced restatement of its results, the price of the company's tumbled 12 percent, or $4.25 per share, in three days trading on the New York Stock Exchange.
"The theory is that if investors had true information that the stock would have traded at its true price, but true information was not available and the company was trading on data that should not have been relied upon," Ottensoser says.
Ormat company executives declined to comment on the upcoming case but released the following statement:
"We are aware that a lawsuit was filed on March 9, 2010, in the United States District Court for the District of Nevada against Ormat, its CEO and its CFO, and that others have announced their intent to file similar lawsuits.
"We do not believe that there is any factual or legal validity whatsoever to any of these claims. We intend to defend ourselves vigorously and thoroughly."
Law firms that have filed, or say they intend to file lawsuits against Ormat, include:
* Brower Piven of Stevenson, Md.
* Federman and Sherwood of Oklahoma City, Okla.
* Kendall Law Group of Dallas
* Izard Noble LLP of West Hartford, Conn.
* Glancy Binkow & Goldberg of Los Angeles
* Bernstein Liebhard of New York
* Law Offices of Howard G. Smith of Bensalem, Penn.
Bernstein Liebhard' Ottensoser says that there is a large number of firms filing because the firms are jockeying to be named lead attorney in the case. The firm that comes forward with the largest amount of shares in controversy by May 10 will be select the lead plaintiff and serve as lead counsel, Ottensoser says.
